Correlation Between Vanguard Extended and Great-west
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Great-west at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vanguard Extended and Great-west into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Great West Sp Mid, you can compare the effects of market volatilities on Vanguard Extended and Great-west and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vanguard Extended with a short position of Great-west. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Great-west.
Diversification Opportunities for Vanguard Extended and Great-west
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Great-west is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Great West Sp Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Sp and Vanguard Extended is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vanguard Extended Market are associated (or correlated) with Great-west. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Sp has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Great-west go up and down completely randomly.
Pair Corralation between Vanguard Extended and Great-west
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.04 times more return on investment than Great-west. However, Vanguard Extended is 1.04 times more volatile than Great West Sp Mid. It trades about 0.39 of its potential returns per unit of risk. Great West Sp Mid is currently generating about 0.31 per unit of risk. If you would invest 13,943 in Vanguard Extended Market on September 2, 2024 and sell it today you would earn a total of 1,604 from holding Vanguard Extended Market or generate 11.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Great West Sp Mid
Performance |
| Timeline |
| Vanguard Extended Market |
| Great West Sp |
Vanguard Extended and Great-west Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Great-west
The main advantage of trading using opposite Vanguard Extended and Great-west positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Great-west can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Great-west will offset losses from the drop in Great-west's long position.| Vanguard Extended vs. Vanguard Total International | Vanguard Extended vs. Vanguard Total Bond | Vanguard Extended vs. Vanguard Value Index | Vanguard Extended vs. Vanguard Growth Index |
| Great-west vs. Aqr Sustainable Long Short | Great-west vs. Doubleline Emerging Markets | Great-west vs. Rbc Emerging Markets | Great-west vs. Ab All Market |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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